Beats' Streaming Music Service Worth $3.2 billion? Apple Thinks so!

Fresh and interesting article posted on Mashable concerning the big news that Apple is close to buying Beats Electronics for $3.2 billion and the real reason behind it.

"(....) If Apple does buy Beats for roughly $3 billion, a deal that is widely reported to be in its closing stages, it won't be because of the headphones. (Though given the fact that Apple sells Beats cans in every Apple store in the world, and has exact sales figures for each model, keeping all that profit to itself would be a nice boost for the bottom line.)
No, this is more about Beats' streaming music service, Apple's tenacious grip on music distribution, and the fact that with a deal like this, Apple could easily become a recording industry giant that cuts out the middleman entirely — a notion that keeps executives at Sony, Universal, EMI and the rest of the major labels up at night.

When Apple CEO Tim Cook had a high-level summit with Beats CEO Jimmy Iovine during a visit to LA in early 2013 — a meeting with much more import than was known at the time — it wasn't to talk about Beats' habit of increasing the bass and vocal ranges in its hardware. It was to discuss the Beats app, then known as "Project Daisy."
The Beats Music app has been out in the wild now since mid-January, and it's garnering respectable reviews. Sure, it's another music streaming service in a world stuffed with Spotify and its ilk, but it has also managed to differentiate itself with some clever tweaks — and an understanding that what most of us want out of music streaming is a service that automagically knows what we want to listen to.

When you sign into the app — a too-lengthy process that could do with a simple Apple ID — you're met with a screen of gently floating bubbles, each containing a musical genre. Tap on three bubbles, and you get another bubble screen with artists. That leads you to lists of albums and playlists you might like to start with. There's a screen of "expert essentials," usually with some newsworthy theme.
And then there's probably the coolest feature to grace streaming music apps in a while: "The Sentence," a kind of mad libs approach to music recommendation. For example:

Image: Beats

As weird as that looks, The Sentence does produce some interesting results — and it gets close to the intangible, emotional answer to the perennial question, "what do I want to listen to now?"
The Beats app just got an iPad-friendly upgrade last week, which seems to have solved some of the technical issues iTunes reviewers have complained about. The ones that remain — the downloaded files are too large, the streaming occasionally freezes up — are just the kind of problems that a company of Apple's scale could help solve.
The music rights library Apple has been assiduously building up over the last decade could also widen Beats' selection — because one of the greatest ironies of the app is that you can't listen to more than one album by Dr. Dre, co-founder of Beats. The Chronic is chronically absent.

Tim Cook, music mogul?

So as much as audiophiles may groan, Beats headphones may bring a veneer of youth culture and cool to Apple, of a kind not seen since its silhouette-based iPod ads. More importantly, the app would give Apple an instant competitor to Spotify, the way iTunes Radio competes with Pandora. (Beats, four months old, has 200,000 subscribers to Spotify's 10 million, but that imbalance would change rapidly if Apple started pimping the app.)
Most important of all, however, is what Iovine and Dre could do for Apple's already considerable clout in the music industry. If you were trying to build a modern-day music label, to persuade more and more big-name artists to ditch their regular suits and release their latest works exclusively via digital download and streaming service, you could do a lot worse than starting with these guys. Iovine has worked with everyone from Springsteen to Lady Gaga to U2 and, of course, Dre has the hip-hop world covered, from Eminem to 50 Cent.
Meanwhile, the New York Post is reporting that Iovine will join Apple as a "special advisor" as part of the deal.
As anyone who's attended an Apple launch event with a musical guest knows — not to mention the iTunes exclusive concerts and Apple store gigs for local artists — Tim Cook has hardly diminished Steve Jobs' passion for taking Apple deeper and deeper into the music business. The long-running lawsuit with Apple Corps over its logo has been settled. Downloads on iTunes are starting to falter. The company is desperate to get more exclusive album deals, as it did with recent releases from Beyonce and Broken Bells.
The more you dig into the possible synergy of an Apple-Beats deal, the more it seems Tim Cook would be getting the company for a bargain price if he strikes now. Headphones not included".